… and THIS is why I LOVE you guys so much; you’re not afraid to state the facts! The “news” reports of discriminating loan practices left me livid for ALL the same exact reasons you listed. How stupid do you have to be to not understand it all comes down to the individual’s numbers & automated underwriting! Take responsibility, teach self-responsibility and STOP looking for someone else to blame!

Unfortunately, there is a political party out there that perpetuates itself on making everyone a victim about any cause and to blame someone else, and without a victim, they wouldn’t have anything to run on. Wouldn’t it be nice if we could concentrate more on education and mentorship for those who need help? In the long run, our society would be much better off.

You hit it directly on the center of the real issue. But, these exact arguments against this system and their likely outcomes were beat to death for a couple years before these price adjusters were put in effect. It was in the middle of the industry near collapse and was sold as insurance against a future FNMA bailout. Now that the government has been using FNMA as a cash cow for these many years since, do we really expect any relief for these borrowers to come out of DC? It’s been bad enough for the entry level borrowers to pay these added fees while the Feds kept rates low and bought up the MBS. As rates go even higher and available home supplies remain very limited, we can only expect it to get harder for these mortgage borrowers unless something changes.

If this was FB I’d thumbs up most of the comments. Saturday I was part of a team that put on a Financial Retreat at our local college. People are woefully uneducated about financial matters: credit, budgeting, banking, investing, and the list goes on. We need to educate them and with better education will come higher scores. It would be naïve to ignore income, but with education that should become much less of a factor.

The recent coverage of this on PBS was a hack job. The HMDA data used did not include risk profile data. PBS is now realizing the other side to this argument and is supposedly working up a response. Stay tuned.

Pricing adjustments have ALWAYS been in existence for risk. Before the LLPAs the risk was calculated on the back end (selling into the secondary market). The risk was simply added to the offered rate at the time of underwriting. Sometimes that higher rate was legitimate. Other times it wasn’t. But lenders could always claim that the higher rate was due to the risk rather than race of an applicant even if not true. The LLPAs codified a uniform method of adjusting for risk. It is actuarially based. Doing away with LLPAs would require an increase in pricing for everyone. Kind of like having a bunch of sick people in your health insurance pool.

The alternative is targeted subsidies. FHA effectively does this with gov guarantees and uniform MIP. Again, there is no free lunch. Someone (taxpayers or borrowers) is going to take the hit if you want to extend credit to low score borrowers.